Australia may have set its minimum wage increase too high

Global Business

The U.S., the U.K. and other countries around the world are discussing raising the minimum wage, but there’s at least one country where it may be too high. 
CCTV America Greg Navarro reported from Sydney.

Australia government considers slowing minimum wage increase

Australia government considers slowing minimum wage increase

The U.S., the U.K. and other countries around the world are discussing raising the minimum wage, but there's at least one country where it may be too high. With one of the highest rates in the world, officials in Australia are considering a slowdown in rate increases. CCTV America Greg Navarro reported from Sydney.

With one of the highest rates in the world, officials in Australia are considering a slowdown in minimum wage rate increases.

For 23 year-old Ciantal Bigornia, life after college has been filled with financial struggles. “I guess I have to compromise a lot of the things I want to do in my life,” she said.

That means still living at home while she works in retail. She makes slightly more than the national minimum wage, which is just over $13.50 an hour. “Everything seems to be increasing and my pay just stays the same,” she said.

New South Wales Union secretary Mark Lennon said Ciantal is not alone.

He said Australia’s minimum wage hasn’t kept pace with the cost of living-making it harder for the nation’s lowest paid 1.5 million workers to survive.

“Up until 10 or 15 years ago, I don’t think we had a generation in Australia of the working poor. Now we do, where people who are working aren’t earning enough to meet their basic needs food clothing and shelter,” Mark Lennon, NSW Union Secretary, said.

By comparison, Australia still has one of the highest minimum wages in the world. The U.S. national minimum wage is just $7.25.

Australia’s rate has increased every year for more than 15 years, the product of an strong economy buoyed by a mining boom and low unemployment.

But the mining boom is over. Economic growth has slowed. Unemployment has risen to a 12-year high at 6.4 percent.

Now an independent commission, which sets the minimum wage, is considering a slowdown in future increases-an idea the nation’s unions strongly oppose.

“Fundamentally, the problem is a lack of demand a lack of consumers spending and so the way to ensure people do spend it to make sure they have a decent dollar in their pocket,” Lennon said.

Many of these small businesses will tell you that Australia’s high minimum wage has had the opposite effect. They can’t afford to higher as many workers as they need, and the added costs are a burden their bottom line.

Last year several automakers announced they would cease production in Australia, citing high wage costs compared with other countries. “It’s about achieving the balance between a minimum wage that maintains the standard of life, the flexibility of the labor force to attract businesses to come into Australia,” economist Peter Esho said.

Leaving the independent commission with a difficult choice, one which Ciantal said she fears could make life even harder.


Sean Turnell of Macquarie University discusses Australia economy

For more, CCTV America interviewed Sean Turnell, associate professor in the Department of Economics at Macquarie University.

Sean Turnell of Macquarie University discusses Australia economy

Sean Turnell of Macquarie University discusses Australia economy

For more, CCTV America interviewed Sean Turnell, associate professor in the Department of Economics at Macquarie University.

  • RJack

    Make something more expensive, people will want less of it. Still basic economics.

  • Ben Chesterman

    Min wage in Australia . Is 17 an hr , they want to raise it to $18.70 an hr